that against the people who may stop smoking and that may be even more harmful. we'll see how it shakes out. frank, thank you very much and that does it for the exchane exchan exchange "power lunch" starts right now >> thank you very much and welcome, everybody here is what is new at 2:00. it is a wednesday on "power lunch. the record rally is back, all the major averages within a percent or so of all-time highs. nasdaq actually nipped above it earlier today but sold off shredding off coronavirus fears right now. so is it a he have to buy stocks again? plus oil bouncing back, but energy shares have been crushed this year. how are companies dealing with the crude reality of $50 a barrel ceo of pioneer will be here to talk about that. and later the big tesla rally coming to a screeching halt. they wiped out yesterday's big rally and we'll talk to ceo of group one auto about whether

demand for electric vehicles really lives up to the hype tha and more on "power lunch." and welcome can to "power lunch," everybody. i'm kelly evans and the dowhigh s&p 500. and the nasdaq in the green by just a quarter percent today backing off some record highs earlier. it is the underperformer thanks in large part to the smash decline in tesla and energy is surging as oil bounces back health care jumping 2% and financials up about 1.5% for more, let's go to bob pisani he at the new york stock exchange >> a lot of faith going on here. remarkable round trip in the last month so we were at 3325 on martin

luther king weekend. guess what we're exactly back there we've dropped about 100 points to 3225. that is about a 3% decline and we quan egained it all abouback and faith in the coronavirus being contained is the most important thing. haven't figured that out yet, but there is a belief that it is happening. faith in the fed helping out, faith in chinese stimulus and finally faith that the globe allege slowdown as a result it already is only temporary. and we've had a lot of companies reporting in the last several daysit already is only temporary and we've had a lot of companies reporting in the last several days about notable low downs nike and adidas closing stores and capacity cuts on airlines. and so you can see this on the earnings already, the s&p 500 just since january 17th, the earnings have come down about 1% but other sectors like materials and energy have had significant

declines in their earnings from just two weeks ago and this is for the first quarter. so these declines are very real, but again, guys, the market believe this is is only temporary. we'll see. >> robert, thank you very much a blowout adp number thorn ahead of friday's jobs report. helping to give investors the confidence that the market rally is fueled by fundamentals and not 450e8 yheliums. so is it safe it buy again and if so what kind of shares brad and rich are joining us. and i'm going to begin with you, rich because i'm a little confused. my notes on the one hand say that you said where to put new money to work, still favoring growth over value. and then in another place, where to put money to work if you believe in this economy and risk tolerant and equities represent best buys. but horrific reverse, remain

cautious and diversify across domestic equities tilt toward value and defensive names. am i supposed to go growth or international? >> you are supposed to diversify. and the specific answer to be honest is going to depend on who you are, your objectives and goals. but in the shorter term, tech stocks and particularly in the u.s., it is a goldie lox economy right now, not too hot, not too cold stable economic growth stable interest rates or lower interest rates and so this is perfect for tech stocks now, if the economy heats up, interest rates and longer term bond yields move up, we'll have to switch from growth to value so it is a very dynamic position to take. we are not betting on stocks overall right now, at least not deploying new money into equity, but where we are currently is overweight growth and in particular tech. >> and last year a lot of the

reason equities were hire had to do with the expansion of more people being willing to pay more for each dollar of earnings. is this year a repeat of that or where the market levels be driven more by fundamentals, ie earnings, profitability and so forth? >> i think that we're back fundamentals because you are right, valuatio perspecti perspective, we are at high levels but you are seeing earn eggs start to come back and you are seeing business confidence bouncing back.ings start to come back and you are seeing business confidence bouncing back and wire starting we're starting to see growth accelerate and if you look at housing, you see that new homes starts highest level since 2007 and when you look at retail sales growth year on year, it is at about the highest level we've seen in the past couple years. there is a real rebound going on

with the any aeconomy and that help the top and bottom. >> and i was looking at the ten year still 1.6% and if we hadn't already talked the disconnect, it would seem odd that it is still so low. so i'll ask if there is anything that you would warn people about with this bubble kind of move in tesla. if this continues to correct downwa downwards? >> potentially, yeah, there is a contagion there psychologically if nothing else. but corporate earnings is what we're focused on the consumer has been resilient. personal disposable income, steady and strong and resilient. but can that translate over to the corporate sector fourth quarter earnings are not showing very well. so the pe expansion from last

year has already moved the market up. still a tough call whether the markets got real growth from here >> and brad, you were talking positively about the housing market how much longer if all these things are going so well can that interest rate remain so low and if is it starts to come back a little bit, is that risk to the positive developments on the housing side >> i would say that we've been talking about interest rates have to increase for how long now? decades? and the fact is, they have not come back. so i would say that is not proven when you have the fed saying we'll keep the interest rates low, they are talking abob abou capping interest rates so if they go up meaningfully, that would be a slow down. but when you look at valuations,

they are pots positively correlated and that would be good for the market and the economy >> so why did the market come back as sharply as it has the first three days of the week >> well, a couple of good economic reports, a sigh of relief from coronavirus. although american century, we wouldn't count the virus out yet. markets seem to have shrugged it out like the common cold but we're not sure you should count it out quite yet but economics seem to be coming through. there were good reports. adp, ism, that seems to be the relief rally right now >> brad, same question for you and does politics have anything to do with the rally over the past couple days >> i think it does and i agree with what rich says,

but i would put it differently we've seen a bunch of different fears coming in here what will happen with impeachment, what will happen with the virus, what will happen with brexit? remember, that just happened a couple weeks ago and all of these things that have been rattling the market for a long time and the market was pricing in r, the end of the world and the world hasn't ended. so how long can you stay terrified. i agree you have to keep an eye on the virus, but the mortality level is actually quite loefw. i think that we will control this and if we don't, we'll know and then we can react. >> all right, folk, thank you very much. appreciate your time crude oil bouncing back today, but still hovering just below $50 per barrel and falling more than 15% so far this year which has taken the energy stocks down with it, as demand

for electric vehicles surging. so how are oil and gas companies hedging against the drop let's ask sheffield from pioneer resources. scott, welcome >> thank you, kelly, great to be on your show >> and it is such a good time to hear from you because there is growing concern about how poorly i guess texas and oil producers might do if the oil price stays at these levels. >> inlgs t think the market is oversold it is back up you 4% today i think with the vaccines coming out, it will just have a short term effect. opec had a together. so a small set back and the market will come back. >> and do you mean the price for your company, what is your

break even for profitability and what would you guess is kind of the break even for the whole region >> the midland in west texas is the lowest break even anywhere of all the shale plays pioneer is around $45 a barrel and the companies has you know, we're all focused on free cash flow and return on capital there has been a shift in all the up stream companies, pioneer will throw at about $5 billion or free cash flow over the next five years so we're only putting about 70% of the revenue back into the ground and the rest is going it buybacks and dividends. >> would it help you if opec cut its crude allocations? >> i don't think that tell rush into it. if it lasts longer and there was

no vaccine coming quickly, i think opec would probably cut half a million barrels a day i think saudi would like to see brent get back up to about $65 to $70 >> let me ask you a long range question and it is kind of off the current market, but one of the stocks that we've been talking about over the last week has been tesla and i wonder how you in your business think about electric or nonfossil fuel fueled vehicles and whether you are at a point where you are contemplating that trend ramping up and what effect it might have on your business walk me through how you think about it, if you do. >> yeah, i try to read as much as i can about it. first of all, it is a little bit above 1% of the new carmarket. so still a slow pace even though tesla and china is up. most people don't realize when they buy an ev vehicle, 64%of

the electricity to charge it comes from fossil fuels. natural gas is going to be the biggest demand driver if we all buy electric vehicles tomorrow in the u.s., gas demand will have to increase significantly because that is the cheapest fume to power electricity. and there is plenty of it in the u.s. >> absolutely true, but at the same time, now that you've had a firm like blackrock saying that they will divest from coal, you have to imagine that oil will be next what do you say to somebody who is 23 years old and say i don't want to invest in an oil and gas company? >> we hear a little bit of that now, but most people who think through it, how do we get rid of 100 million barrels a day. we're still xwleing and most people predict that we donweren see peak until 2030 to 2040. so how do we all of a suddenover night change a market that is useding 100 million barrels a

day. it will take a good 50 years to shift in my opinion. >> but people are happy to just -- in other words, they will say i understand that i'm a user but i don't want to invest in it. >> as i mentioned, we're changing to the free cash flow model and so if people want to invest in the sector, what is interesting, pioneer, i've said this the other day on brian ang brian's sullivasullivan's show,r was the only stock that was up refining sectors changed its model.sullivan's show, pioneer e only stock that was up refining sectors changed its model. several of the refiners changed to a free cash flow model. now it is time for the producers to change to that same model and i think investors like black rock will continue to buy the stock. >> and one more thing before you go you mentioned $45 is roughly your break-even price.

we're not that far above it. are you contemplating layoff, cut oting off production? >> pioneer has the best balance sheet of any upstream company in the u.s. we look at a debt to ebitda, it is less than 0.5 and so we could basically pay off our debt in less than six months if we wanted to secondly pioneer is very heavily edged. we're a firm believer in hedging. so when we saw events like the air strikes, pioneer was very aggressive in hedging in the market so we are not going to do any of the things that understand >> got it. understood and we really appreciate you joining us and explaining landscape. >> thanks. >> scott sheffield of pioneer. and a news alert on a new case of the coronavirus in the united states. meg tirrell has the details.

>> in the state of wisconsin, they have confirmed their first case of the novel coronavirus. it was a person who traveled back from china in the last two weeks. health officials still saying the risk to the general population here is low >> and more big interviews coming up on "power lunch. earl hesterberg will us and we'll talk about trends in the auto business and more and first the new head of the san francisco federal reserve mary daly will join us, what impact could the coroniravus have on the economy and what the fed does "power lunch" will be right back d in, or held back. d in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different. it's open and flexible enough to manage all your apps and data securely, anywhere,

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welcome back federal banks continue to push easy money policy with china the latest to ease fears surroundings coronavirus those worries putting the federal reserve back in play here in the u.s. this year as well joining us now is the san francisco fed present mary daly with steve liesman >> thanks. i'm here with the san francisco fed president mary daly. i do want to start where tyler was talking when which is the coronavirus. obviously you have a district

that is closest to asia. what have you seen on the effect on the regional economy and what are you bracing for? >> little impact yet on the regional economy most of the interest rates in our here are on the friends and family who are in china oftentimes and affected. the human toll is most on people's minds but of course he we're watching it we have had a reduction in flights coming in from china into the san francisco airport >> what about if china's economy has already been downgraded by up to a full percentage point, does that knock on to your economy here on the west coast and the fulliest economy? >> if any major economy stumbles a little bit, then we all sort of sway. but the impacts are limited because think about viruses in

the past or natural disaster, they have temporary impacts. but once the viruses go away and things go back to normal, there will be a bounce back. and so a temporary impact on the u.s. economy and go away once things have been resolved. it bears further watching of course but right now, i'm not looking for this to do anything material to our economy >> and the market seems to disagree a little bit. over the time that this virus has been out there as a major news story, obviously we've seen huge swings in stocks, also seeing an increase in the outlook for a federal reserve rate cut as soon as maybe september or july to look at the feds futures market. and it seems out of kilter with your view of what the fed should do >> the way i look at this, this is yet another uncertainty we have faced over the last year

and a half a wave of uncertainties. we have slower global growth, perhaps a hard brexit, geopolitical concerns. and this is just another kind of uncertainty. those are all headwinds for us and we have taken last year three rate cuts that put kom days accommodation into the system and that is putting the any into a good position to weather the storm, if you will now if the uncertainties get worse or the virus is much worse than currently thought to be or other things emerge, that could change the equation. but for right now the way i see it, the cuts that we have in place already and the accommodation puts the u.s. economy in a good place to weather the storms >> i don't want to put words in your mouth, but it is saying that the made are are ket rket e ahead of itself. >> and i say that we look at the whole portfolio of risk and on one side we've seen the chances of a hard brexit be reduced, the trade agreements have given us a

little more hope that that uncertainty will come down but think of all the head winds together, there is some blowing less quickly or less strongly and some that have strengthened. >> give me your overrecall throughout look for the economy coming off a year where it looks like we'll do about 2% growth. what is the outlook for 2020 >> my own personal outlook is for us to grow at roughly 2%, maybe a little faster. that is above my estimate for what is potential in the united states so my estimate is 1 ppts.8, so a little would have trend which will continue to put pressure on labor markets and continue to move it back up toward 2% goal >> and i guess i can ask you this question, is monetary policy appropriate for that outlook? >> i think that we have policy in a really good position that delivers these outcomes. so the way i start when i'm a policymaker, we have two-man dates. we are missing on the 2%

inflation goal and the labor market looks to have more room are to run so if you put more accommodation in, which we did last year, that pushes the economy 4-- it continues to grow above trend and so that is appropriate policy >> one of the things that you bring to the table as president of the fed is your expertise in the labor market how low can the unemployment rate go? >> we're still finding that out. if you ask any economist, they would have said 4.5 before we really start to see inflation take off and now we're down to 3.5 and it could go even lower. so i think that we need to learn what full employment in the united states is as opposed to guessing and then stopping short of really fully realizing it >> and how do we do that, just let it ride? >> we keep our he eye eye on two

things we look at the inflation goal and we haven't achieved that yet either so we have room to explore and experimentally find full employment >> i see a labor market tightening and we see that it is attracting workers in. and they are looking for ways to retain employees but i don't yet see it reflected in wage increases that where so substantial that i believe that it will push price inflation over the 2% goal so for me, it is a strong labor market, but not one that is historically tight as the low unemployment rate would suggest. >> what are the risks if you get this wrong to the down side for example? are you concerned about where the stock market is right now and how high it is >> so the as to being mstas to a reflection of the optimism for

the future oftentimes. and i think one of the things that buoys the stock market is the sense that we're continuing into the 11th year of our expansion and when i talk to my contacts, i spend a lot of time talking about the air of pessimism, especially last year early in the year. but as the year went on and we took the accommodation for the honest taker pol monetary poly started glowing optoptimistic. and now they are moving plans that had been shelved and moving them into activities >> a good place to send it thank you so much for joining us >> thank you >> tyler, because to you in new jersey from unbelievably lovely san francisco. >> kelly and i were looking out the window there and thinking

what are we doing here >> just ridiculous so much good stuff out here. >> steve, thanks very much and we are at session highs in the wake of that interview. today up more than 400 points on the dow and oil bouncing back in a big way as well. up more than 2% in crude were the coronavirus concerns overdone plus you knew it couldn't last forever. slinsane run hitting a road block will the rally resume tomorrow we'll explore that imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination.

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welcome back here is your cnbc news update. senator mitt romney of utah says that he will vote to convict president trump of abuse of power making him the first republican to support removing trump from office. he said that he would against the second article of impeachment. and the head of the fbi laying out some of his moves to create problems with the agency highlighted by an inspector general report christopher wray appearing at a hearing before the house judiciary committee. >> the failures highlighted in

that report are unacceptable, period they don't reflect who the fbi is as an institution and they cannot be repeated the fbi has embraced every last one of the inspector general's recommendations. an impaired driver taking a joy ride along the kansas city chiefs super bowl parade route, put into a forced spin by police offices who then arrested him and another person at gunpoint deputies through out stop sticks while several patrol cars surrounded the car and stopped it as it was approaching the crowd. quite a scene there. that is the news update this hour ty, back to you. >> that is called an interception by the police >> havery good. >> sue, thanks let's take a look at the markets. and they are higher and not by just a little bit. look at the dow, up 414 points s&p 500 at 1%.

and nasdaq is a laggard up just a third of a percent it was at an all-time high earlier this morning but backed off. the russell is up 1.3. >> and markets shrugging off the news that romney will vote yes let's talk about the power movers look at bio gen shares up 22% and snap is sinking double digits after missing revenue expectations the move just a small blip in what has been an incredible run for snap as shares have still more than doubled in the past year and a weak earnings report sent shares of boot barn tumbling they are on pace to have its worst day since 2017 and oil bouncing back jumping back above 50 a barrel eric chemi is at the desk. >> and you can see the green right here, wti and brent.

higher for the second time in the last 12 sessions following news that opec and its allies are mulling further cuts and that could lend support to prices in the event of a demand impact stemming from the coronavirus outbreak bp noting after its earnings thorn that prolonged slowdown from the virus could reduce 2020 demand growth by 300 to 500 a day roughly half percent of global supplies. ment eia reported a larger than expected rise in the u.s. supply back to you. ahead, ghosting. the unicorn valuation getting cut in half as investors seem to be spooked and plus ford and tesla both sinking today. earl hesterburg joining us live to talk car sales, electric vehicle demand and much more and mortgage apps jumping to a

seven year high as lower rates drive demand what it means for the housing market

welcome back to "power lunch. check out shares of tesla, one of the worst performers in the s&p 500 if were even in there but still up 25% and with this correction, was it inevitable in phil lebeau is here with more >> and it was inevitable that we would see some type of pullback. will it drop down to 400, 300? nobody knows for sure. when you talk to the analysts, they can't even do a valuation a couple things were part of the reason why you saw shares of tesla tumbling it was downgraded to a hold. and woe nt even do the price targets because for everybody they are all over the plate. you also have a tesla executive in china saying that some of the model deliveries from the new plant in shanghai, they may be delayed, obviously that plant is closed down like so many other plants in china as they are

dealing with coronavirus and then you have a slowing china mar debt overalket overal. and nobody is not sure what coronavirus will do for the demand for vehicles in china is it a blip, will it have a big impact on the any? that is what people are wondering including those looking at tesla jchb mo general motors beat the street and held its capital markets, basically an analyst day where they gave their guidance and during that meeting where they were briefing analysts, they said that they considered themselves to have immense potential when it comes to electric vehicles given the scale and technology that they have developed meanwhile take a look at shares of ford. ford reporting after the bell, it missed with q4, it gave

guidance that 1 belis plea expiw expectations and increasingly even says that it was because of execution. we have no idea or very limited idea in terms of where the growth is for ford in the future >> they have more than any other automaker, correct me if i'm wrong, pivoted away from sedans and towards suvs and trucks. >> correct >> but they all are to a certain agree. >> absolutely. what started several years ago, i remember people in detroit said this is ridiculous, he will go all in on trucks and suvs and now you have gm and ford doing the same thing.market has moved away from sedans so it is a smart move to make there. but with regard to ford, the question is you have a great truck lineup, strong suvs, but the market is looking for growth in electric vehicles, autonomous, where is that in the future jim hackett saying trust us, we're working on it. not sure trust is there right now. >> all right

phil, thanks so much let's stick with autos group one automotive reporting record earnings today and it has been riding upward nearly 60% over the past year can the ride continue with new car sales slowing just a bit let's bring in our friend earl hesterburg, president of group one automotive always good to have you here we always appreciate your perspective. let's pick up where we left off with phil and get your thoughts about ford i'll come to your company and the mix of new very succesus usd so on. but talk to me about ford. are you seeing the weakness at ford that seems to be in the marketplace? >> no, actually not at all we did experience those launch problems with the explorer that were mentioned in the earnings report that was inconvenient for us

but we had a fantastic year with ford they did move away from these small cars and i don't think that our employees in the u.s. ever noticed it. it is a truck suv market and ford is very powerful in those ro produc products in the uk, our business was down less than any other business and we're a little more concerned about the move away from cars with foshd in trd in but ford was good for us. >> and a lot of your footprint in the united states is in the states in texas, oklahoma, the south and southwest where i'm sure trucks are a big part of the product. since you mentioned the uk, talk to me about houd yw you are thig about brexit and whether it will taenkt your b affect your business or is it a nonfactor. >> it has been a dredful two

year in the uk and that is why i'm proud of the records that our company set because the u.s. performance was so strong, it overcame a really difficult year in the strangely enough, withia week or two after the general election on december 12, we saw more customers out kicking tires on car lots. and we'll have to wait and see how march plays out because that is the first big car selling month of the year. but our order take was up dramatically in january. so i feel better about the uk than i have in more than two years. >> and general moteer tos seems to be trying to reassure investors by saying that it will be a leader in electric vehicles.be trying to reassure s by saying that it will be a leader in electric vehicles. what does that mean for the future of the dealer ship model? >> i don't think it means all that much because the way that we look at electric or hybrid

vehicles, it is just a vehicle with a different type of propulsion system or powertrain. we sell and service what customers want to buy. and clearly there is a big investment by all of the traditional automakers to move toward electric vehicles and such and we sell more in the uk than we do in the u.s we're selling the jaguar in some numbers and bmw electric vehicles but to us, it is taking care of the customer, selling what they want to buy and servicing what they drive >> on the point of servicing though, a lot of teslas upgrades frankly come through software updates. and again, that looks to be a big part of the future so is there an existential threat to the service model that we might be seeing here as more of the technology in cars becomes computerized >> not really. we've studied that because there was that concern, but 9% or less of our business are these software updates

electric vehicles are very heavy, a lot of stress on tires, suspension, even on the electric vehicles that we're selling already, a lot of them in the sho f shop various things. there are motors in there, gel around the batteries to keep them cool that have to be changed. so i just think that it will be a different type of service. >> and they get body damage like any other car. >> as a matter of fact, we have an authorized tesla collision repair shop in several markets and believe it or not, they crash quite a bit too and we repair them. >> earl, thank you very much appreciate your time >> and i hadn't thought about battery gel. the bond market now, and rick santelli is tracking the action. >> indeed cars are my passion alone with bonds and speaking of treasuries, look at the 2 year note yields, you can see how we

suddenly climbed the right side. and now higher than the left side we stood at 144, up three basis points but the cushion is relatively small. 24 hour tens, do you realize that we shot up higher at 3:30 a.m. than on the good data as a matter of fact, we had a 166 almost touch so we are lower now that we've had good data in the ten10s. and if you look at the vix, you can see volatility suddenly moving lower, dollar index moving hire. and finally should it close at this level, it would be the highest close of 2020 and reach back into december tyler, back to you >> thank you very much and as rick mentioned, the ten year yield rising today action but the big drop so far this year has helped spark a minute any boom in the housing market we'll talk about that next (soft music)

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mortgage applications led by a huge spike in refinancing. diana olick is following the story from washington. >> yeah, and that is because mortgage rates hit their lowest level since 2016 and the arch rate on the 30 year fixed spell to 3.71% and that is almost a full percentage point lower than a year ago and that sent current borrowers rushing to refi. those applications jumped 15% for the week and were a stunning 183% higher than the same week one year ago not surprising, given that more than 9 million borrowers could stand to save close to 300 bu'30 bucks a month at today's rates this mini refi boom was unexpected as rates were not moving much before news of the coronavirus and most thought rates would move slowly higher this year. and while refis surged, applications to buy a home

dropped 10% for the week but still 11% higher than a year ago. and today it is less about rates and more about the severe shortage of homes for sale and that is heating up home prices yet again. >> and there will be a lot more to this story. thank you for now. diana olick in a unicorn after housing its valuation by $500 million. the stock expected to go public tomorrow what the price cut means for the ipo up next on power lunch

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welcome back to "power lunch. it's 7 before the hour we are at the highs of the session. the dow now up more than 440 points check out the move this week in three days, the dow is up more than 3.5% of course, this is following last week's steep sell-off and we will discuss casper's ipo and the wakeup call it got next. don't forget, you can always watch or listen to us live on the go on the cnbc app it's better than the ones the democrats used you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge

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♪ ♪ online mattress retailer casper slashing its target price for it's upcoming ipo. the company now aiming to sell shares between $12 and $13 and that cuts the former unicorn's valuation in half. as investors seem to be spooked, can we be in store for a not so friendly casper ipo. with us the jay riter, professor ritter, is this just a casper issue or does this tell you something about the attitude toward the ipo market? >> i think it's reflecting the

attitude towards money-losing companies. nothing specific about ipos. but after a few years where high growth, but unprofitable companies were getting very receptive opinions, including casper with the venture capital investments in it, late last year the whole area got downsized in terms of valuations and casper is no exception. >> you say it's about money-losing companies but tesla has been losing money for 16 years. >> that's true, but casper is in a much more competitive industry without a lot of upside potential in terms of the ability to earn high profit margins in a competitive industry >> you know, i'm also curious if people are using tesla as an example of the u for ya that might be in the market right

now, why not ipos this time around is it because lightning only strikes once and the dot-com era was just the dot-com era what would it take for there to be a ipo hype cycle again? >> we've got a couple of trends going on this is the eighth year in a row with a lot of biotech companies going public but what's also very noticeable is the lack of bio-back companies going public last year only ten went public, the lowest level since 1989, with the exception of 2008 in spite of all the money that's gone into buy-outs, most of them are selling out to other buyout firms rather than going public and that looks like, as long as lots of money flows into private equity, that's going to be a

damper. >> lots of companies like to call themselves tech companies like this one or wework, but in truth, this is a mattress company that would like to command a tech-like multiple how do you react to that thought? >> i'm in complete agreement that the company would like to call itself a tech company, but while they do sell online, they're also opening up brick and mortar stores. lots of people want to be able to lay on a mattress before buying it. >> does that make them any different from the existing mattress companies which will be happy to take the mattress to your house and set it up for you? >> exactly that's the problem with competition. >> companies lost money, at least for the past three years, and they have this return guarantee that must be costing them a lot of money, too we've got about 30 seconds, sir. >> yeah, and they've got a competitor purple innovation that's got some of the same problems but purple innovation has about

the same sales, but it's profitable on average it's able to sell mattresses at a higher price >> jay ritter, thanks for your time today appreciate it. >> thank you. >> and thanks for watching "power lunch," everyone. >> "closing bell" will start in just a few seconds we'll see you back here tomorrow welcome to the "closing bell," everyone. i'm wilfred frost at the new york stock exchange. exxon is up and that's helping to lead the dow to session highs as we speak of about 450 points with 59 minutes left of trade. >> morgan brennan. building on yesterday's strong gains, you just heard wilf mention the major archlgs are firmly back in positive territory for the year energy leading the sectors today, the first time in six sessions